Supreme Court hears case in which Pildes filed amicus brief on behalf of former SEC chairmen

On Monday, December 7, the Supreme Court heard oral arguments for a significant case in which Richard Pildes, Sudler Family Professor of Constitutional Law, filed an amicus brief on behalf of seven former Securities and Exchange Commission chairmen concerning the constitutionality of an independent regulatory agency.

Free Enterprise Fund v. Public Company Accounting Oversight Board invokes the period of corporate accounting scandals involving companies such as Enron and WorldCom. The question before the Court is whether a provision of the Sarbanes-Oxley Act of 2002, passed by Congress in response to that rash of corporate improprieties, is unconstitutional—specifically, the provision creating the Public Company Accounting Oversight Board (PCAOB) to regulate accounting firms when they serve as auditors of public companies.

While the petitioners in the case argue that the PCAOB, a private entity whose members are appointed by the SEC to perform government-like regulatory functions, has too much executive power without sufficient presidential oversight, Pildes’s brief maintains that the PCAOB is “completely subordinate” to the SEC, whose members, in turn, are appointed by the president.

The case could have broad implications for similar independent agencies without complete presidential control, such as the Federal Trade Commission and the Federal Communications Commission. Speaking with Nina Totenberg on NPR’s Morning Edition, Pildes called the case “basically an attack on the constitutionality of independent agencies.... It’s almost the last gasp of the unitary executive branch theory,” a conservative argument concerning a lack of direct presidential oversight that has been made against such agencies unsuccessfully in the past. Pildes added, “I think fundamentally what’s going on here is an effort to relitigate that big battle in the context of the SEC and this new board.”